Optimal Debt Arrangements under conditions and Economic Growth——Based on the Provincial empirical data of China

Debt used to regarded as thegodin China's rapid economic growth in the past and is now dismissed as thedevilas the country's economy has stepped into anew normalphase at present. In fact,the debt itself is neithergoodnorevil,and there is no such thing as universal optimal debt arrangements,so a reasonable debt arrangement should be in line with the size and stage of the economic development. To explore the optimal conditions of debt for economic growth target,this paper conducts an emipirical research based on China's provincial Panel Data from 1978 to 2012 and finds that there is a mutual restraint between China's debt scale and debt structure,and there exists anoptimal solutionin thedouble growthof debt scale and debt structure Before the optimal solution,both the growth of debt scale and the growth of public debt ratio will lead to economic growth,but after reaching this limit,only by making trade-offs between reducing debt scale or restructuring debt can economic growth be achieved.. The optimal solution of the regional debt scale and debt structure is attained in the premise of the financial structure,financial revenue and expenditure,the proportion of state-owned investment and the urbanization rate. The robustness test further verifies these conclusions of the paper again. Lastly,some relevant policy recommendations have been put forward based on the conclusions of this paper.